Discover How Much to Save for Life's Unexpected Expenses
Why an Emergency Savings Fund is Essential
Life is unpredictable, and an emergency fund can help you navigate unexpected expenses without using high-interest loans or credit cards. Here are some reasons why an emergency fund is essential to overall financial wellness.
- Unexpected Expenses - Emergencies, such as medical bills, car repairs, or home maintenance, can arise at any time. Having a savings fund allows you to cover these costs without disrupting your financial situation.
- Job Loss - Losing a job can be financially devastating. An emergency fund can help cover living expenses while you search for new employment.
- Peace of Mind - Knowing you have a financial safety net reduces stress and anxiety, allowing you to focus on other aspects of your life.
- Avoiding Debt - Without a savings fund, you might have to rely on credit cards or loans in emergencies, leading to debt accumulation and interest payments.
Types of Saving Methods
There are various ways you can save money effectively. Choosing the right one depends on your goals, risk tolerance, and preferences. Here are some common saving methods.
Traditional Savings Accounts
Traditional savings accounts are offered by banks and credit unions, providing a safe place to store money with easy access. They typically offer lower interest rates compared to other savings methods but are highly liquid.
- Pros - Easy access, FDIC insured, low risk
- Cons - Low interest rates
High-Yield Savings Accounts
These accounts generally offer higher interest rates compared to traditional savings accounts. However, they are often available from banks that operate primarily online, adding some layers to the process. They are also FDIC-insured.
- Pros - Higher interest rates, FDIC-insured
- Cons - May have minimum balance requirements; many are online-only so funds could take several days to access.
Money Market Accounts
Money Market accounts combine features of savings and checking accounts, offering higher interest rates and check-writing capabilities.
- Pros - Higher interest rates, check-writing privileges, FDIC-insured
- Cons - Higher minimum balance requirements than traditional saving accounts.
Certificates of Deposit (CDs)
CDs are time-deposit accounts that offer higher interest rates in exchange for keeping your money locked in for a fixed term (ex. 6 months, 1 year).
- Pros - Higher interest rates, predictable returns, FDIC-insured
- Cons - Limited access to funds until maturity
Common Questions
Our interest rates for savings accounts depend on what type of account you choose and the amount of funds kept in your account. For the most up-to-date interest rates on UMCU's savings accounts, please visit our Rates Page.
Each UMCU savings product has a different minimum balance! For most accounts, the minimum balance is just $5.00.
Account Type |
Minimum Balance |
|---|---|
|
Savings |
$5.00 |
|
Business Savings |
$5.00 |
|
Money Market Savings |
$500.00 (to avoid monthly maintenance fee); $2,000.00 (minimum amount to earn interest) |
|
Business Savings or Money Market Savings |
$5.00 |
|
Holiday Savings |
No minimum balance |
|
Financial Little League, Minor League, Major League |
$5.00 |
Sometimes! Generally, our savings accounts don't incur fees, but there are a few specific instances where a fee may be charged.
Account/Activity |
Fee |
|---|---|
|
Inactivity Fee (waived if aggregate balance is over $100 and / or activity on any share or loan on the account within the last 6 months) |
$5.00 per month |
|
Holiday Savings Withdrawal |
$5.00 |
|
Money Market Monthly Maintenance |
$5.00 |
|
Courtesy Pay* |
$30.00 |
|
Non-Sufficient Funds* |
$30.00 |
|
Overdraft Protection |
$2.00 per transfer to your Checking or Savings account |
A savings account and a CD are both great ways to grow your funds. A savings account is a flexible way to store and access funds. They're great for keeping emergency funds on hand and can pay monthly interest. On the other hand, CDs are an excellent, low-risk option for short-term investing. You choose a set amount and agree to leave it untouched for a period of time. In return for not touching your funds, you'll learn a dividend at the end of the term. For example:
You receive cash gifts at your high school graduation party and decide to put $5,000 in a CD for four years at a rate of 3.00% so you can earn a dividend when you graduate college. After four years, your funds will grow to $5,150 - just for sitting in a CD!
Here's some more key differences to consider.
Feature |
Savings Account |
Certificate of Deposit (CD) |
|---|---|---|
|
Interest rates |
Tend to be lower than CDs; rates can change over time; interest earned monthly |
Higher, fixed rate; interest paid at end of a term. |
|
Access to funds |
Flexible; funds can be added or withdrawn at any time |
Funds are locked in and cannot be added or withdrawn for a set time frame (6 months - 5 years) |
|
Best use |
Emergency funds |
Reaching a specific savings goal |
|
Fees |
Overdrawing your account |
Early withdrawal penalty |
All members of UMCU are assigned a savings account because it holds your place at the credit union. You don't have to use it if you don't want to. All that it requires is the $5.00 minimum balance.
Everyone's financial situation is unique so the best way for you to save for retirement depends on many factors! We encourage you to speak to one of our helpful and knowledgeable team members who specialize in retirement planning! Give us a call or schedule an appointment to learn more about UMCU's IRA accounts.
With terms as short as six months, you can grow your savings quickly and confidently—all while keeping things simple. Here’s how it works:
- Choose your term length (6 months to 5 years).
- Deposit as little as $500 in new funds**.
Earn interest, compounded monthly, and watch your savings grow.
Everyone who opens an account with UMCU has a savings account. The $5.00 minimum deposit holds your place at the credit union.
While IRAs are a type of savings account, there are a few key differences to keep in mind.
|
Savings Accounts |
IRAs |
|---|---|
|
Good for short-term savings and emergencies |
Long-term savings for retirement age |
|
Funds stay as cash |
Funds are invested in stocks, mutual funds, and ETFs |
|
No limit to contributions |
Yearly limits |
|
Funds can be withdrawn at any time |
Funds cannot be withdrawn until age 59 1/2 or you'll pay a penalty |
|
Holds cash deposits; may earn interest depending on type of savings account |
Some tax advantages may apply, depending on type of IRA |
You bet! Interest is deposited monthly and the more you save, the more you'll earn!